Apple lobbies for lower taxes to increase US chip production

Apple has campaigned with the US government for tax breaks to support domestic chip manufacturing, suggesting the iPhone maker is keen to move more of its supply chain to the US.

In disclosure reports for the second and third quarters, the company said it had engaged officials from the Treasury Department, Congress and the White House on tax issues such as “issues related to tax credits for domestic semiconductor manufacturing.”

Since the first custom processor was released in 2010, chips have become an important performance differentiator for Apple. The company designs some of these components in-house, but outsources production to Taiwan Semiconductor Manufacturing. Many other parts for Apple devices are made in China. This has exposed the company to import tariffs and other risks from a trade war between the US and China. Taiwan, where TSMC operates, has also become an increasing focus of geopolitical tensions between China and the US.

Apple’s recent lobbying coincides with the move by the company and its partners to, in some cases, move some production away from China and even back to the US. The US semiconductor industry is also increasingly seeking government support to increase domestic production.

Apple’s lobbying work in the US is now largely led by corporate veteran Tim Powderly, who was promoted at the time when Cynthia Hogan, Apple’s former top US lobbyist, joined former Vice President Joe Biden’s campaign. An Apple spokesman declined to comment.

Earlier this year, TSMC announced it would be building a $ 12 billion chip plant in Arizona, and the company has recruited tax breaks there.

In 2013, Apple began manufacturing a low volume Mac Pro computer in the United States. Last year the same Texas facility was used for final assembly of a new version. This decision was made after the company was granted wage breaks.

Apple also sources components from several chip manufacturers who manufacture some of their products in the United States, including Broadcom and Texas Instruments. Apple has also started using Qualcomm again for iPhone modems, and the San Diego, California-based chipmaker makes some products domestically through manufacturing partner Global Foundries.

Intel, the current maker of the Mac’s main processors, builds some of its chips in the United States. However, if Apple switches to its own Mac chips next month, it means that production of that component will be relocated to Taiwan.

– With the assistance of Ian King and Ben Brody

© 2020 Bloomberg LP

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